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(CEP News) Ottawa - Canada has potentially even more riding on the fortunes of the Detroit Three automakers than the U.S. due to its greater economic exposure to the auto industry, a BMO economist says.
Writing in the BMO e-newsletter Focus, BMO economist Michael Gregory says Canada's auto sector accounts for a bigger percentage share of employment and gross domestic product than it does in the U.S. "U.S. President Eisenhower selected General Motors' head Charles Wilson to be his Secretary of Defense in 1953. During his Senate confirmation hearings, Wilson was asked whether his pedigree would affect his ability to make decisions adverse to the interests of GM. He responded: 'what was good for the country was good for General Motors and vice versa'. This statement became a mantra for the importance of GM and the rest of the automotive industry to the U.S. economy, but it could be chanted even louder north of the border," Gregory wrote. He noted Canada's auto sector accounted for 2.2% of Canadian GDP, while the industry only counts for 1.3% of U.S. GDP. Gregory says that while calculations of the value added by the auto sector necessarily excludes the value added by industries that provide inputs to car manufacturing, such calculation understates the impact on the economy that would result if domestic automakers were to disappear. "Not only would the automotive sector's value added be lost, but the valued added of all the sectors that provided inputs to automotive production would be lost (such as from the materials industries)," Gregory writes. While auto manufacturing jobs account for 0.6% of U.S. payrolls, the auto sector makes up 0.9% of Canadian payrolls, Gregory says. In the first nine months of 2008, the Detroit Three made up 67% of Canadian light vehicle production, while GM, Ford and Chrysler were responsible for only 57% of U.S. auto production, Gregory writes. "Canada's relative economic exposure to the automotive sector is greater than America's. This, to paraphrase Mr. Wilson's famous words, means "what's good for GM (and the rest of the industry) is good for Canada too," Gregory concluded. By Sean McKibbon,
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, edited by Nancy Girgis,
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